Boston, MA 02/07/2014 (wallstreetpr) – Ocwen Financial Corp (NYSE:OCN) cannot continue with the planned deal with the mortgage major Wells Fargo & Co (NYSE:WFC). The company has announced that it is putting an indefinite hold on its planned acquisition of some 184,000 mortgage servicing rights, otherwise known as MSR, from Wells Fargo.
This move reveals the mounting concern that the New York Department of Financial Services has had about the company’s ability to handle another load of MSR. Thus, the Department requested OCN to put the deal on hold, obviously as the agency takes a look at the capability of Ocwen to handle the assignment.
About the mortgage servicing deal
Ocwen Financial Corp (NYSE:OCN) and Wells Fargo last month announced the deal which many had expected would close in the next few weeks. The deal involved loans with total principal balance of $39 billion. The 184,000 mortgage loans servicing rights that OCN was to assume, represented about 2 percent of the total residential servicing portfolio that Wells Fargo had at the end of the fourth quarter.
Wells Fargo is a major mortgage originator and recently reported beating results despite facing tough moments present in the housing market. The high interest rates on mortgage refinancing loans have kept away many of its customers, making housing one of its biggest headaches presently.
Way forward
Ocwen Financial Corp (NYSE:OCN) has promised its commitment to work closely with the regulators in order to resolve the concerns about its capability to handle additional load of mortgage servicing rights. It is hoped that once the arising issues are addressed between the regulators and the company, its MSR deal with Wells Fargo will be fast tracked.
Conclusion
Ocwen Financial Corp (NYSE:OCN), a financial services company, handles servicing and origination of mortgage loans, and most of these works are done through subsidiaries. The company has a market value of $5.62 billion. The reports that the company had put on hold MSR acquisition from Wells Fargo resulted in the stock losing more than 4.2 percent of its market value in the previous trading session.
